Sunoco 2003 Annual Report Download - page 23

Corporate and Other
Corporate Expenses—Corporate administrative expenses increased $14 million in 2003
largely due to higher employee-related expenses, including pension and performance-
related incentive compensation.
Net Financing Expenses and Other—Net financing expenses and other increased $8 million
in 2003 primarily due to the $9 million increase in after-tax expense attributable to the
preferential return of third-party investors in Sunoco’s cokemaking operations (see “Coke”
above). In 2002, net financing expenses and other increased $9 million largely due to
higher after-tax preferential return expense ($6 million), higher interest expense ($2 mil-
lion) and lower interest income ($1 million). Partially offsetting these negative factors was
higher capitalized interest ($2 million).
Income Tax Settlements—During 2001, Sunoco settled certain federal income tax issues
which increased net income by $21 million.
Asset Write-Downs and Other Matters—During 2003, Chemicals’ one-third-owned BEF joint
venture recorded a provision to write down its MTBE production facility to its estimated
fair value. Sunoco’s share of this provision amounted to $15 million after tax. In 2003,
Sunoco also recorded a $17 million after-tax charge to write down Chemicals’ plasticizer
assets that were held for sale at December 31, 2003 to their estimated fair values less costs
to sell and to establish accruals for employee terminations under a postemployment plan
and other required exit costs; and a $9 million after-tax gain from Retail Marketing’s sale
of service stations in connection with its Midwest Marketing Divestment Program.
During 2002, Sunoco recorded a $14 million after-tax provision to write off a 200 million
pounds-per-year polypropylene line at Chemicals’ LaPorte, TX plant and a 170 million
pounds-per-year aniline and diphenylamine production facility at Chemicals’ Haverhill,
OH plant and to recognize related shutdown costs; recorded a $2 million after-tax provi-
sion in connection with the shutdown of certain processing units at Refining and Supply’s
Toledo refinery; recorded a $3 million after-tax provision to write off an idled Logistics
business refined products pipeline and terminal; and established a $3 million after-tax ac-
crual relating to a lawsuit concerning the Puerto Rico refinery, which was divested in
2001.
During 2001, Sunoco recorded a $23 million after-tax charge for employee terminations
and other required exit costs primarily related to the disposal of its Value Added and East-
ern Lubricants operations; recorded an $11 million after-tax gain on the sale of the
Company’s Puerto Rico refinery; and reversed an $11 million after-tax accrual for warranty
claims and other contingent liabilities established in connection with the disposal of the
Company’s real estate business.
For a further discussion of the provisions for asset write-downs and other matters, see Notes
2 and 3 to the consolidated financial statements.
Analysis of Consolidated Statements of Operations
Revenues—Total revenues were $17.93 billion in 2003, $14.38 billion in 2002 and $14.14
billion in 2001. The 25 percent increase in 2003 was primarily due to significantly higher
refined product prices. Also contributing to the increase were higher crude oil sales in
connection with the crude oil gathering and marketing activities of the Company’s Logis-
tics operations, higher refined product and convenience store merchandise sales volumes
largely due to the acquisition of the Speedway retail sites and higher consumer excise tax-
es. In 2002, the 2 percent increase was primarily due to higher refined product sales vol-
umes, higher consumer excise taxes, higher crude oil sales in connection with the crude oil
gathering and marketing activities of the Company’s Logistics operations and higher mer-
chandise sales at the Company’s convenience store outlets. Partially offsetting these in-
creases were lower refined product sales prices.
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